Let’s say that you are themanager of a restaurant chain (choose your favorite,Ap

Question

Let’s say that you are themanager of a restaurant chain (choose your favorite,Applebee’s, Outback, McDonalds, you name it). Yourregional director comes to you showing the following variances foryour store. He wants you to explain these variances. What are some possible explanations for eachvariance?

(Hint: There is no one rightor wrong answer. There are many possibilities. This isjust about brainstorming and understanding what the differentvariances indicate.)

Variance 2: Your store isshowing an unfavorable fixed overhead spending variance of$1300.

Explanation / Answer

Hey Busy Bee Overhead spending variance is the differencebetween the actual overhead & the budgeted overhead . Unfavorable variance indicates that the firm hasincurred more overhead than its budgeted expenditure. In otherwords , it has overshot it's budget. This is mostly due to Unexpected changes inrents, insurance , property taxes etc .

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